$2bn fresh credit line deal with Indian bank Wednesday

DHAKA : The credit agreement between Dhaka and New Delhi for extending a new Line of Credit (LoC) of US $ 2 billion to Bangladesh will be signed on Wednesday, nine months after the signing of an MoU in this regard, reports UNB.
Economic Relations Division (ERD) Senior Secretary Mohammad Mejbahuddin and Chairman and Managing Director of EXIM Bank of India Yaduvendra Mathur will sign the credit agreement on behalf of their respective sides at the NEC-2 conference room in the city’s Sher-e-Bangla Nagar area at 3pm, an ERD official told UNB. The official said Prime Minister Sheikh Hasina gave her consent to the credit deal on February 24 this year.
The fresh Indian credit bears an interest rate of 1 percent with 0.5 percent commitment fee to be replayed in 20 years with a five-year grace period.
Earlier, the MoU on the new LoC was signed on June 6 last year during Indian Prime Minister Narendra Modi’s Bangladesh visit. According to Finance Ministry officials, both Bangladesh and Indian sides spent nine months to complete negotiations on the conditions of the memorandum of understanding (MoU) for implementing the projects under different ministries. Sources said India has finally agreed to amend the conditions.
Under the amended conditions, in case of projects involving civil construction, construction materials will be sourced from India-based suppliers if they are made available at prices stipulated in the contract. The quantum of material sourced from India may be reduced from 75 percent to 65 percent. Further reductions may be considered on a case-by-case basis, provided that they are not sourced from a third country.
India’s Exim Bank agreed to reduce the stipulated amount from 75 to 65 percent to implement the construction work in the latest negotiation meeting held on November 9 last year in Dhaka.
After signing the agreement, Bangladesh will send the detailed project plan of the listed projects under the new LoC.
The proposed 13 projects for a fresh LoC are: setting up double railway tracks on the Khulna-Darshana line, converting the Parbatipur-Kaunia metre-gauge line to a dual-gauge track, upgrading the Syedpur railway workshop, installation of Barapukuria-Bogra-Kaliakor 400-kilovolt power transmission line, procurement of 500 trucks and 500 buses for the Bangladesh Road Transport Corporation (BRTC), procurement of modern equipment to upgrade the Roads and Highways Department, setting up four medical colleges and hospitals and a National Burns and Plastic Surgery Institute, constructing 49 polytechnics and teacher training institutes, upgrading the Ashuganj river container port, and improving the Ashuganj river port-Akhaura road. Two other projects under the information and communications technology ministry are also included in the list.
Earlier, India extended a $ 1 billion credit line to Bangladesh for developing infrastructure projects, mostly in the communications sector. The Indian government has also converted US$ 200 million out of the US$ 1 billion Line of Credit as grant assistance in June 2012.